The BenefiTS of telematics-based auto-insurance products could go beyond better risk selection and pricing—and could include better fraud detection and the ability to provide feedback toconsumers on cO2 emissions, fuel consumption and other factorsthat may lower the cost of driving, a new celent report says.

in “Telematics-Based insurance: has itsTime finally Arrived?” celent says insurersare overcoming historic obstacles byemploying telematics, or usage-basedinsurance products.celent says the cost of devices,installation and servicing has declinedand will continue to fall. The taskof transferring data from devices tothe insurer has also become easier, asdata sent via the 3G network meansconsumers no longer have to transferthe data themselves to a computer andthen send it to the insurer.

even privacy concerns have eased,
celent claims. “customers’ data-privacy
concerns appear to be allayed by the chance
of cheaper premiums,” the report notes. it
cites a Towers Watson survey that found
nearly two-thirds of U.S. drivers would be
willing to alter their driving behavior to
achieve a 10 percent insurance discount.
Of those drivers, 76 percent would allow a
device in their vehicle to monitor behavior.

poorer drivers—who will appear to be
normal drivers if traditional rating factors
are used.”

In my opinion, 2011has served as the tippingpoint for telematics andusage-based insurance.”

Robin Harbage, director of usage-based insurance for Towers Watson

The Celent report cites a TowersWatson survey that found nearlytwo-thirds of U.S. drivers wouldbe willing to alter their drivingbehavior to achieve a 10 percentinsurance discount.

As the obstacles are overcome,telematics programs will grow, celentsays. in line with comments made lastmonth by moody’s, celent says insurersthat do not offer such products will “findthemselves insuring shrinking pools ofcelent says insurers’ benefits,however, will go beyond being able tomore accurately price risks. “claims-improvement opportunities includeimproving fraud detection, for example, byusing accelerometer readings to gauge theG-force during impacts and settle whiplashclaims more accurately; and reducing leadtime between accidents and first noticeof loss, which increases the likelihood ofachieving a speedy and fair settlementbefore the involvement of third parties,”the report says.